Are market forces strong enough to deliver efficient health care systems? Confidence is waning.

Our paper draws lessons for policymakers from twelve communities as we identify the power and limits of general market-based strategies for improving the efficiency of health systems. The vision of market forces driving our system toward efficiency attracted politicians, policy analysts, and practitioners in the 1990s. Today some policy advocates profess even more faith in unfettered market forces. Market participants in the twelve communities in the Community Tracking Study, however, have become doubtful, and our analysis confirms the logic of their pessimism. Major barriers to efficient market outcomes exist amid growing willingness to consider renewed government interventions.